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August 07, 2010

Forensic experts of the United Arab Emirates are reported to have concluded that the "M Star", a fully-loaded Japanese oil tanker sailing home from Abu Dhabi through the Strait of Hormuz, which suffered easily-repaired damages in an incident of unknown origin on the night of July 28,2010, had been the target of a terrorist attack which failed to cause severe damages.

2. A local news agency, citing Coast Guard sources, has reported as follows: "An examination carried out by specialised teams had confirmed that the tanker had been the subject of a terrorist attack.UAE explosives experts who collected and examined samples found a dent on the starboard side above the water line and remains of home-made explosives on the hull. Probably the tanker had encountered a terrorist attack from a boat loaded with explosives."

3.US and Japanese officials, who are making their own investigation, have not yet come out with their finding. However, the suspicion of the UAE experts that a boat loaded with explosives had probably been involved in the attack corroborates a claim made on August 3 on behalf of a group called the Abdullah Azzam Brigades that it was responsible for the attack. The group posted a statement and a photo on an Islamist ( Al Faloja) website known to be used by pro-Al Qaeda terrorists. The statement said as follows: “Last Wednesday (July 28), after midnight, the martyrdom-seeking hero Ayyub al-Taishan blew himself up in the Japanese tanker M.Star in the Strait of Hormuz between the United Arab Emirates and Oman.” The photo posted on the web site was of the alleged suicide bomber (al- Taishan) dressed in an Arab-style white robe and cap, pointing at a picture of a supertanker on a videoscreen. The group claimed the attack was meant to be a blow to the global economy and the oil market and that those who have offered other explanations for the incident are trying to cover up the incident.

4.In 2005, a group with a similar name had claimed responsibility for a terrorist attack at the Egyptian resort of Sharm al-Sheikh and for two unsuccessful rocket firings against two US warships in Jordan’s Aqaba port. The authenticity of the claims could not be established. It is not clear so far whether there is a separate pro-Al Qaeda organisation by that name or whether terrorists carrying out opportunistic attacks assume that name in homage to Abdullah Azzam, a Palestinian of Jordanian origin who was among the first of the Arab volunteers to have gone to Pakistan to join the jihad of the 1980s against the Soviet troops in Afghanistan. Many consider him to have been a mentor of Osama bin Laden.He used to live in Peshawar, the capital of the Khyber-Pakhtunkwa province of Pakistan, where he was killed under mysterious circumstances. He has many admirers in the Pashtun community in the Af-Pak region. When the Tehrik-e-Taliban Pakistan (TTP), as the Pakistani Taliban is known, claimed responsibility for the attack on the Pearl Continental Hotel of Peshawar on June 9,2009, it claimed that the suicide attack was carried out by its Abdullah Azzam Shaheed Brigade or AASB.

5. The "News" of Pakistan reported as follows on June 11,2009:

"KOHAT: An unknown al-Qaeda-linked group, Abdullah Azzam Shaheed Brigade, claimed responsibility for Tuesday’s (June 9,2009) bombing at the Pearl Continental Hotel in Peshawar, in which 17 people were killed and around 60 were injured.

"A spokesman of the organisation, Amir Muawiya, phoned reporters in Kohat city Wednesday (June 10,2009) to claim responsibility for the attack and threaten more such bombings. He said the bombing was in retaliation to the operations by the Pakistani armed forces at the behest of the US in Swat and rest of Malakand region and also in the tribal areas of Darra Adamkhel and Orakzai Agency. He claimed that important people including foreigners were killed when the hotel was car-bombed.

"Amir Muawiya is a Pakistani Taliban commander operating in the semi-tribal area of Darra Adamkhel, located between Peshawar and Kohat. His group, led by Commander Tariq Afridi, is affiliated to the Baitullah Mahsud-led Tehrik-e-Taliban Pakistan (TTP).

"According to Amir Muawiya, until now different groups used to claim responsibility for bomb attacks but now the central shura, or council, of Taliban and also al-Qaeda had decided that only the Abdullah Azzam Shaheed Brigade would in future do so and others would keep quiet.

"When asked about evidence that his group indeed had carried out the suicide bombing at the Pearl Continental Hotel, Peshawar, the spokesman said his group would be willing to explode a small bomb outside the BBC office in Islamabad to prove the group’s power and capability.

"The spokesman also claimed responsibility for some other recent terrorist attacks in Islamabad, Lahore and Peshawar. He said his group had carried out the attack on the Police Training Academy, Manawan, Lahore, the bombing of the Nato transport terminals on the Ring Road in Peshawar and other assaults.

"By naming the group as Abdullah Azzam Shaheed Brigade, its founders apparently wanted to honour the late Sheikh Abdullah Azzam, a Palestinian from Jordan who was among the first Arab nationals who volunteered to join the Afghan jihad against the forces of the then Soviet Union in Afghanistan in the 1980s. He gave up his teaching job at the Islamic University in Islamabad and shifted to Peshawar to facilitate the Arab nationals who had been motivated by him to fight in Afghanistan.

"Abdullah Azzam is also credited with convincing Osama bin Laden, Dr Ayman al-Zawahiri, Sheikh Omar Abdur Rahman and others to come to Peshawar and take part in the Afghan war against the Soviet forces and Afghan communists. He was killed along with his two young sons in a bomb explosion in Peshawar in the late 1980s and all of them were buried at the Jalozai camp for Afghan refugees some 30 kilometres from Peshawar.

"Amir Muawiya did not explain the kind of links the Abdullah Azzam Shaheed Brigade had with al-Qaeda or the identity of the leader of the group. He also did not say as to how many Arab nationals were members of this group. It was not possible to confirm the claims of this largely unfamiliar group." ( End of the "News" report)

6. Did the terrorist or terrorists, who carried out the attack on the Pearl Continental Hotel and now on the Japanese tanker, come from the same organisation, namely, the TTP or were they co-ordinated by the same command and control, namely that of Al Qaeda----either from Pakistan's North Waziristan or Yemen? That is a question, which needs looking into.

7. The modus operandi of launching a suicide attack with a boat filled with explosives used against the Japanese tanker resembles the MO used earlier by Al Qaeda for attacks on US naval ship USS Cole in Aden in October 2000 and a French tanker Limberg off Aden in October 2002.An Al Qaeda suicide bomber rammed the American destroyer Cole in the port of Aden, killing 17 American sailors. Limburg, was attacked in a similar manner on October 6,2002, a few miles off the coast of Aden, and one Bulgarian crewman was killed.

8.The French tanker, carrying crude oil from Iran to Malaysia, was in the Gulf of Aden off Yemen to pick up more oil. It was sailing under charter for the Malaysian oil company Petronas. An explosives-filled dinghy rammed the starboard side of the tanker and detonated. The vessel caught fire and oil leaked into the Gulf of Aden. Local forensic experts found traces of TNT on the tanker. Al Qaeda claimed responsibility for the attack. A statement attributed to bin Laden in jihadi web sites said: " By exploding the oil tanker in Yemen, the holy warriors hit the umbilical cord and lifeline of the crusader community, reminding the enemy of the heavy cost of blood and the gravity of losses they will pay as a price for their continued aggression on our community and looting of our wealth."

9. Abd al-Rahim al-Nashiri was suspected to have been responsible for the attack. He was earlier suspected in the attack on USS Cole too.On February 3, 2006, Fawaz Yahya al-Rabeiee, who had been sentenced to death for the Limburg attack, and 22 other suspected or convicted Al Qaeda members escaped from jail in Yemen. Jamal al-Badawi, who organised the USS Cole bombing, was also among the escapees.Thirteen of the 23 escapees had been convicted for their role in the Cole and Limburg bombings. On October 1, 2006, al-Rabeiee and Mohammed Daylami were shot dead by Yemeni security forces in the capital Sanaa where they were hiding after escaping. One of the escapees was arrested. There was no information regarding the whereabouts of the remaining 20 escapees. There is a possibility that some of the escapees might have played a role in the attack on the Japanese tanker.

10. The attempt to blow up an American plane over Detroit on December 25,2009, the failed attempt to cause an explosion in Times Square in New York on May 1,2010, and the failed attack on the Japanese tanker have one common feature---- all the three were well-planned and well-strategised attacks that failed due to poor execution by the terrorists deputed and not due to the vigilance of the intelligence and security agencies. If the attacks had succeeded, the consequences might have been severe.

11. Al Qaeda in the Arabian Peninsula was involved in the Detroit attempt. The TTP in the New York attempt. Who was involved in the Hormuz attempt? (8-8-10)

China’s declaration last week claiming “indisputable sovereignty” over the South China Sea has set the stage for a tense power play in the waters that connect the Pacific and Indian Oceans.

After nearly three decades of lying low in order to improve its position in the western Pacific, Beijing has put its ties with the region at risk with a strong assertion of its territorial claims and flexing its newly powerful naval muscle.

As China’s anxious neighbours, especially in southeast Asia, turn to the United States for protection, the Obama administration has waded into the dispute by calling for an “international framework” to resolve the disputes.

Unsurprisingly, China says it is opposed to internationalisation of the contesting territorial claims in the South China and that it is prepared to negotiate bilaterally with all other states that have competing claims over South China Sea. The weak southeast Asian states, of course, have no reason to sit down alone and separately with China at the negotiating table.

After a year-and-a-half of attempting to accommodate a rising China, the Obama administration has finally decided to reclaim its role as the principal arbiter of regional security in the western Pacific. India, which has a big stake in protecting the sea lanes of communication all along the Asian littoral must prepare itself for a new dynamism in the region as it will be drawn willy-nilly into the new debate on the geopolitical future of the South China Sea.

Vietnam’s oil

India’s plans to acquire the troubled oil major British Petroleum’s off-shore assets in the South China Sea, apparently discussed during the recent visit of Petroleum Minister Murli Deora’s visit last month to Hanoi, are certain to put India in the crossfire between China and Vietnam. Last year, under Chinese pressure, BP announced that it will cease exploration in Vietnam’s Nam Con Son basin. If Hanoi does support the Indian bid, it might be based on the expectation that Delhi will not back off when confronted by Beijing.

Meanwhile the Indian Army Chief V.K. Singh’s visit to Hanoi, for the first time in 15 years, coincided with the gathering tension between Vietnam and China. For the moment, at least, it is not Delhi that worries Beijing, but Washington’s new bonhomie with Hanoi.

In an editorial last week, Beijing’s Global Times warned both Washington and Hanoi. “Pressure to maintain an influence and guard against a rising China, the West is eager to cosy up to Vietnam and other southeast Asian countries”. “Meanwhile”, the paper added, “the Western media likes to poison Sino-Vietnamese ties by painting China as ‘an elephant’ which can easily trample on the interest of Vietnam. Vietnam should also be careful about not becoming a chess piece for the US as it pursues a broader regional agenda.”

Cantonese protests

Language protests? In China? But don’t all Chinese people speak the same language? For most Indians, who learn to live in the Tower of Babel, reports from southern China of popular protests against the imposition of Mandarin certainly come as a surprise.

Unlike India where multiple tongues flourish and often feed into the linguistic divide, Communist China has consciously sought to promote national unity by replacing the diversity of hundreds of Chinese dialects with a standardised version of Mandarin. Clearly, it has not been easy to wipe out the Cantonese dialect spoken by nearly 70 million people in the booming provinces of southern China. The recent protests in Guangzhou (earlier known as Canton), the capital of Guangdong province, were triggered by reports that the government was planning to yank off all television programming in Cantonese.

There have been reports that companies were under pressure from the government to fine those who speak Cantonese at work. In the Guangdong province and the neighbouring Hong Kong, Cantonese is the vehicle for a vibrant popular culture. In a tribute to the strength of the Cantonese sentiment, the local government denied any plans to impose Mandarin on all TV programmes. The official newspaper of the Chinese Communist Party, People’s Daily, stepped in to call for a balance between promoting Mandarin and respecting local cultures.

The daily quoted a director of the local TV station as saying, “Guangzhou TV always sticks to dual language broadcasting. We serve two audiences who speak either Mandarin or Cantonese and do not intend to abandon either of them.” It is not a surprise that in southern China, the market tends to prevail over the overzealous nationalists.

In November 2009, India opposed a resolution on Burma’s human rights violations in the United Nations General Assembly. So did China, North Korea, Libya, Iran, Zimbabwe and Belarus. If any of these countries is celebrated for the vibrancy of its democracy or the intensity of its commitment to human rights, then it is as closely guarded a secret as any embarrassment that India might have felt for being in such exclusive company. Judging, however, by its record of fawning over the Burmese junta, it must have felt proud and not embarrassed. That this was so, tends to be further indicated by the warm welcome it extended to Gen Than Shwe during his ‘religious-cum-official’ visit to this country from July 25 to 29.

The General is Burma’s President and the head of the country’s State Peace and Development Council, which, in turn, is a reincarnation of the State Law and Order Restoration Council. The SPDC is, as the SLORC was, the principal striking arm of one of the most obnoxious dictatorships the world has seen. The junta that spawned both has been brutally suppressing Burma’s movement for democracy ever since it defenestrated the result of the May 27, 1990 parliamentary election, in which the National League for Democracy, led by Daw Aung San Suu Kyi, won more than 80 per cent of the seats.

The junta has been accused, and not without basis, of war crimes and crimes against humanity under international law including the use of child soldiers, the destruction of villages, the displacement of ethnic minorities, the use of rape as a weapon of war, extra-judicial killings, forced relocation and forced labour. Its persecution of Nobel Laureate Aung San Suu Kyi, who has been under detention for 14 of the last 20 years, requires no elaboration. Three years ago, it ordered a crackdown on peaceful protests which were joined by Buddhist monks who were ruthlessly subjected to torture, imprisonment and murder. In a supremely ironical act, Gen Than Shwe started his tour of India with a visit to Bodh Gaya and the Sarnath Temple!

Nor is there any indication that the junta will change. The election, expected later this year, is scripted to be a sham. A farcical referendum has approved the Constitution of 2008, under which the election is to be held. It puts the military above the law and gives the armed forces’ commander-in-chief the right to appoint members to 25 per cent of the seats in both Houses of the Burmese Parliament. More, the SPDC has enacted five draconian laws which give the junta absolute control over the election process, and bar political prisoners, including Daw Suu Kyi, from contesting. Even campaigning is going to be restricted. On June 21, Burma’s Election Commission prohibited political parties from campaigning in a manner that “harms security, the rule of law and community peace”. While the reference to “rule of law” sounds like an exercise in black humour by a junta that respects neither legality nor humanity, those familiar with its ways, know what precisely the EC’s directive means. Understandably the NLD has refused to contest the election without a change in the electoral laws.

Why is India courting the junta? The standard answer is realpolitik related to countering China’s penetration of Burma, ensuring Burma’s cooperation against the rebels in north-eastern India, promoting economic cooperation with Burma, particularly in the energy sector, and implementing India’s new ‘Look East’ policy which demands good relations with Burma through which land routes to countries East and South-East Asia, run.

Unfortunately, the junta is playing India and China against each other to serve its own ends. Also, New Delhi will be hard put to catch up with Beijing which has established extensive ties with Rangoon. On the economic front, Burma is receiving more than it is giving. Unlike Bangladesh, which has cracked down hard on India’s rebels on its soil, driving some of their leaders into India’s custody, there is little tangible evidence of Burmese action against them. Clearly, India’s Burma policy is unlikely to have the intended results and is more likely to strengthen an obnoxious dictatorship besides selling Burma’s democracy movement down the river.

For the Americans, June was feared as the worst month in Afghanistan for fatalities in their longest campaign in history. Now July has overtaken the average loss of two soldiers a day with more than twice that number wounded. In August the trajectory is expected to rise. The US dilemma of fixing Afghanistan is compounded, it turns out, by first fixing Pakistan where, not surprisingly, they have found a tunnel at the end of light. The choice is stark: Pakistan, a failed state with nuclear weapons, or Pakistan a treacherous state which has to be managed.

For the Americans the journey to Afghanistan is in some ways akin to the 15th century Spanish explorer Christopher Columbus. When he left, he didn’t know where he was going. When he had reached, he did not know where he had arrived. When he returned, he did not know where he’d been. That is the reason most Americans are asking: Where are we, where are we headed and how do we get there. To these there are more questions than answers.

For most Americans, the McChrystal-Petraeus strategy is simply not working. The debate preceding the December review of AfPak strategy is centred on the Biden (US Vice-President) - Peter Galbraith (former UN diplomat in Afghanistan) - Kofer Black and Bruce Reidel (US counter-terrorism experts) and Robert Blackwill (former US Ambassador in India) alternate strategies. The ‘Blackwill Plan’ is the most radical as it suggests a de facto partition of Afghanistan between Pashtuns and non-Pashtuns.

In one way or another the alternate strategies recommend scaling down US forces from 140,000 to 20,000, holding key population centres and relying on air power and drones to marginalise the Afghan Taliban. The strategic shift is one from COIN (counter-insurgency) to counter-terrorism targeting top Al Qaeda and Taliban leaders. The exit plan is linked to this strategy through a more robust Afghanisation of the security sector and a yet uncharted reconciliation process to establish a power-sharing agreement with the Taliban. These are the contours of Plan B which leans heavily on Plan A. As both these are unlikely to work, the US must think of a Plan C but more on that later.

Gen David Petraeus has reiterated that the US strategic objective is to prevent Afghanistan from becoming a platform for terrorism. Neither Plan A nor Plan B foot the bill. What is worse Pakistan, which is the pivotal player in this strategy, has other ideas to keep the fires burning, WikiLeaks notwithstanding. For the Americans, Pakistan is an indispensable ally as 70 per cent of logistics for the US and Nato forces pass through its territory. Afghan Taliban sanctuaries are located on its soil and the ISI has promised to deliver reconcilable Taliban.

Further bad news. The Dutch contingent of Nato has pulled out, the British -— like the Americans — have also announced that troops will begin pulling out in 2011 and that all troops will be back home by 2014, a deadline US President Barack Obama has not enunciated. Indicating a time-line is the greatest strategic error, giving joy to the Taliban who say: The Americans may have the watches, we have the time.

The ground situation is depressing but not outright bad. Only 29 of the 121 key districts of Afghanistan are under Kabul’s control. The training of Afghan security forces is behind schedule. Only 23 per cent of the Army and 12 per cent of police are capable of operating independently. Though salaries have been increased to ensure retention of soldiers, desertion rates are 12 and 17 per cent for the Army and the police. Rogue elements — Taliban sympathisers — have since 2008 carried out three deadly attacks against their Western trainers and buddies.

Operations against Marja, which Gen McChrystal called a bleeding ulcer, were partially successful. Another American troops surge is expected shortly

but it seems operations are being relaunched in Helmand province as the Taliban have sneaked back. There aren’t enough boots on the ground to ‘hold’ ground which has been cleared. And the concept of ‘Government in a box’ has failed. Some ground reports suggest that the big offensive to liberate Kandahar, the heart and soul of the Taliban, has been postponed indefinitely if not called off altogether.

Where does all this leave India which was seen to have been relegated to the margins after the London and Kabul conferences? Prime Minister Manmohan Singh will get to discuss India’s role in Afghanistan with Mr Obama when he visits Delhi in November. India must work on a Plan C but wriggle its way into Plans A and B to stay relevant by combining with its impressive use of soft power some elements of hard power.

As a regional power and the most direct recipient of the spillover of terrorism from AfPak region, Delhi has legitimate interests in Afghanistan. If Nato can be present astride the Hindukush, India, which shares the mountain ranges, has a more immediate compulsion to be there. India’s interests must never get subsumed by those of the US and Pakistan. While Washington, DC accepts New Delhi’s security concerns, it does little beyond just that, yielding to Islamabad’s sensitivities with the gentle remonstration: Pakistan must do more.

The US is hostage to Pakistan in Afghanistan. It is rewarding Islamabad with billions of dollars of hi-tech military equipment for all its duplicity, atoning for the sin of abandoning Pakistan after the Soviet withdrawal from Afghanistan. Why does India have to keep paying for acts of omission and commission by the Americans?

India must abandon its reactive and diffident policy and become more assertive about its future role in Afghanistan. It should do more with its surplus hard power and, under a UN flag whenever that happens, deploy troops there. It must also enlarge and diversify its development and capacity-building efforts while ensuring the security of Indian workers. This is India’s second out of area mission after Sri Lanka where four divisions were maintained by sea and air.

New Delhi can prepare alternative frameworks for Plan C: A regional initiative backed by a UN peace-keeping force when insurgency in Afghanistan has been contained and there is some peace to keep. In the meantime, India and Pakistan must talk to each other about sharing strategic depth in Afghanistan. All this and more for Mr Obama’s November agenda.

The Indian government, at the last round of commercial negotiations with Russia for the supply of four additional reactors at Kudankulum, had wanted the contract to include a clause allowing for the “right of recourse” to NPCIL to sue the Russian supplier for any nuclear liability that may arise as a result of a nuclear accident due negligence on the part of the Russian supplier.

The Russians have, apparently, refused to accept the Indian suggestion, citing article 13 of the India-Russia Inter Governmental Agreement (IGA) of 2008, which stipulated that “the Indian side and its authorised organisation at any time and at all stages of the construction and operation of the NPP power units to be constructed under the present agreement shall be the operator of power units of the NPP at the Kudankulam site and be fully responsible for any damage both within and outside the territory of the republic of India caused to any person and property as a result of a nuclear incident occurring at the NPP.”

Although the IGA is not a public document, like all India-Russia nuclear agreements, analysts had already concluded that the IGA would have included a clause in the agreement similar to article 13 in respect of supplier liability in case on nuclear accidents, since the Russians themselves had agreed to a similar clause in their nuclear agreements with the French and German suppliers. So the existence of article 13 was no great surprise.

What was surprising was the fact that the Indian side had wanted the Russians to accept the “right of recourse” at all. It was surprising on many counts: the first being the demand by India to include such an article in the contract when (i) the earlier Kundankulum contract had no such clause and was, in fact, identical to the IGA formulation; (ii) as far as known, no international nuclear supplier has ever included such a clause in any of the various supplier-operator agreements that had been concluded so far in international nuclear commerce; (iii) even the current Indian nuclear liability bill under consideration by the parliamentary standing committee on science and technology only gives the operator the “right of recourse” in case of a nuclear incident resulting from “ the willful act or gross negligence on the part of the supplier” and not a blanket “right of recourse” in case of negligence; (iv) no known non-Russian foreign supplier is ever likely to agree to such a clause in their contracts with India and in fact, now that the terms of the IGA are known, are likely to demand similar clauses in their own contracts with the Indian operator thereby nullifying the effects of article 17 (a) and 17 (b) of the Indian nuclear liability bill; and (v) finally and most importantly, the grave consequences for India-Russian nuclear commerce if the Russians insist on negotiating a new agreement in line with their current domestic nuclear export control laws.

It is not well known that during the Yeltsin presidency, the Russians had amended their domestic nuclear export laws to require IAEA fullscope safeguards from non-nuclear weapons states (NNWS) such as India as early as March 1992, while the NSG itself adopted the fullscope safeguards requirement only at the 1993 Lucerne plenary. Also, while the 1993 NSG guidelines did allow for exports to NNWS without fullscope safeguards in “exceptional circumstances”, the Russian export laws were amended only in May 2000 to allow such exports and even then, only to facilitate nuclear fuel exports from Russia to India for Tarapur operations, in the face of stiff opposition from other NSG members, who had held that such exports did not fall under the “exceptional circumstance” exemption. The Russians once again made another such shipment of fuel for Tarapur in 2006, in violation of NSG guidelines, again despite disapproval from other NSG members.

In addition, the 2008 IGA allowed for the transfer of reprocessing technology from Russia to India. So far, this is the only such reprocessing technology transfer that India has been able to negotiate with any other country among the many nuclear cooperation agreements that India has so far negotiated with a large number of countries. The 1998 IGA would thus have enabled Russia to supply such reprocessing technology even if, in future, the NSG amends its guidelines to prohibit such transfer in view of the “grandfather” exemption allowed under NSG guidelines. And in January 2009, the Russians amended their nuclear export laws to make an exception for India to allow such reprocessing technology transfers.

However, in December 2009, the Russian government issued a decree to implement the declaration on non-proliferation of weapons of mass destruction and their means of delivery, adopted at the 2009 L’Aquila G-8 summit, to establish that the export of Russian units of isotope uranium enrichment plant, chemical reprocessing of irradiated nuclear fuel as well as information relating to such installation of equipment and technologies to any state that is not a nuclear weapon state is only to the extent necessary to carry out surveillance or to ensure their construction and operation, without disclosing the key elements of technology associated with such facilities.

Therefore, given the fact that, at the most, India will be only able to include in any contract a “right to recourse” for the operator to the extent specified by article 17(b) of the Indian nuclear liability bill, but such a renegotiation of the IGA in turn will have to conform to current Russian laws in respect of nuclear exports and would, therefore, automatically exclude any reprocessing technology, the net result of such a renegotiation would result in loss to India of any access to reprocessing technology. It makes very little sense for India to insist now on a revision of the IGA. It is an altogether different matter that India should have included in the IGA a clause to the effect that article13 of the IGA will hold only till such time as India enacts a nuclear liability bill in accordance with the international conventions. A similar clause was included in the Russia-Germany agreement and Russia should have had no difficulty in accommodating such an Indian request at that time. India did not do so then and it is too late now unless, of course, the Russian federation agrees to the Indian proposal as a gesture of goodwill.

August 06, 2010

The south Indian wedding of the century is in the offing! Rohan Murthy, the 28-year-old son of Infosys co-founder and Chief Mentor N. R. Narayana Murthy, got engaged to Lakshmi, daughter of TVS Motor Co-chairman Venu Srinivasan on Friday in Chennai. This wedding will bring together two illustrious families who are industry moguls in their own right. Narayana Murthy told Deccan Chronicle, “Our son Rohan and Lakshmi, daughter of Venu Srinivasan and Mallika Srinivasan, were introduced to each other by a mutual friend of theirs seven months ago. They courted for seven months. Rohan proposed to Lakshmi yesterday (Thursday), and she said YES!”

Rohan is a Microsoft fellow doing a doctoral programme in computer science at Harvard University while Lakshmi is on the board of the TVS Motor Company and Sundaram-Clayton.

Murthy went on to say that everyone in his family is excited. “Lakshmi is a wonderful girl and Rohan is an extraordinary man. We are going to let both of them decide on the marriage date. All I can say is that my wife and I are very happy. We are looking forward to the wedding,” he adds. Lakshmi’s mother Mallika is the daughter of the Amalgamations Group Chairman, A. Sivasailam, and her father Venu is currently the chairman of the Confederation of Indian Industry. Venu’s wedding to Mallika in the ’80s saw two big industrial families come together. The wedding to come is perhaps, even bigger with two well-known families of India being linked.

The Rohan-Lakshmi wedding is likely to take place on a date set by the young couple themselves. The wedding is expected to be in Chennai followed by a reception in Bengaluru where the Murthys live. The Murthys also have a daughter Akshata, who is married, while Lakshmi has a younger brother, Sudarshan.

By Félix Krawatzek

When President Medvedev took office in 2008, it was widely expected that former President Putin would take back the reins by 2012, at the latest. The change in the constitution in December 2008 to extend the presidential term to six years was widely seen as a strengthening of President Putin’s tenure in the future. Against all expectations, however, it is Medvedev who is increasingly distinguishing himself from his former mentor by proposing an independent political project for Russia, which has at its heart the ‘modernisation’ of the country. In this new Commentary, Félix Krawatzek, visiting Researcher to CEPS, explains why 2012 will be a decisive year for Russia and an interesting one for the rest of the world.

By Tai AdelajaRussia Profilehttp://www.russiaprofile.org/page.php?pageid=Business&articleid=a1281029635Russia has Moved to Ban Grain Exports as Drought and Wild Fires Continue to Destroy Crops, Putting a Big Question Mark Over the Winter Sowing Set to Start this Month

The Russian government on Thursday slapped a temporary ban on the export of grain and related agriculture products as sizzling heat and stifling humidity across Russia continue to destroy crops and jeopardize winter grain planting. "I think it is advisable to introduce a temporary ban on the export from Russia of grain and other agriculture products made from grain," Prime Minister Vladimir Putin told a televised government meeting. The ban is expected to last from August 15 to December 31, 2010. Experts say the move would enable Russian wheat exporters to renege on their supply contracts as it provides them with the possibility of pleading force majeure.

As the drought grows in intensity and impacts harder, the sowing of winter grains, due to start this month, is also expected to be worse than usual in some northeastern regions as the record heat wave has sapped moisture from the soil, the national weather center said.

Last year, Russia harvested 97 million tons of grain but this year experts predict that harvests will be 25 million tons less. So severe has the drought been that the Russia Grain Union has cut its forecast to between 72 and 78 million tons, compared to nearly 100 million tons last year and a bumper harvest of nearly 110 million tons in 2008. The drought has forced the government to declare a state of emergency in 27 crop-producing regions as more than 10.3 million hectares of crops were destroyed this year alone, the Agriculture Ministry said Tuesday.

The consequences of this year’s reduced harvest are already being felt at the global level, particularly with wheat, Russia’s biggest cereal crop. Russia supplied eight percent of the world’s wheat last year, becoming in effect the planet’s third largest exporter. This year however, exports are expected to be nowhere near as big, as the drought has led to a serious dip in production.

The sudden shortfall in grain production prompted calls for the government to ban grain exports temporarily to allow suppliers to cancel contracts. “The government should set a temporary ban on grain exports immediately,” Nikolai Demyanov, deputy chief executive of the Russia division of the Glencore International Grain Company, said, Bloomberg reported. “[Government] should set a ban rather than an export duty because a duty doesn’t qualify as force majeure for exporters,” he said, referring to a legal clause that allows a company to cancel contracts because of circumstances beyond its control. He suggested that such bans can be introduced by presidential decree with immediate effect.

Demyanov told Russia Profile on Wednesday that his company “is taking a pause to allow state officials to sort things out by themselves,” based on the situation on the ground. “This would enable them to come up with a decision on whether or not to allow grain exports,” he said. Alexander Belyayev, Deputy Agriculture Minister said on Tuesday that the government had no immediate plans to reduce exports due to the drought. Earlier, the state grain trader United Grain Company said that it still planned to export no less than 1 million tons of grain this year. Metropol analyst Nadezhda Timokhova said she had expected the government to impose some export duties in September or October after the Siberian grain harvest, when there is a clearer indication of what domestic demand will be.

Putin said Thursday that grain from the government intervention fund will be distributed to regions without auctions, following a suggestion last week by First Deputy Prime Minister Viktor Zubkov that the grain should be distributed among regions worst-hit by the drought using a quota system. The intervention auctions, initially scheduled to begin on August 4, were pushed back as the state-run United Grain Company continues to receive applications from companies that want to participate. The government earlier announced plans to sell some three million tons of grain, mainly feed grain, to domestic animal breeders and flour millers. In the past intervention auctions have enabled the government to utilize grain reserves to forestall significant rises in domestic food prices, by buying up grains in times of plenty for resale when harvests are bad. The grain intervention fund currently has 9.64 million tons in storage, according to figures published in Rossiiskaya Gazeta on Wednesday.

Belyayev said Tuesday that the Ministry has revised its grain production forecasts downward by more than 20 percent to between 70 million and 75 million metric tons, from an original forecast of 90 million tons. “There are enough resources in the country to keep everything smooth and steady,” Belyayev said. “We already have 21.5 million tons of grain in carry-over inventories, and we have already threshed 35.5 million tons.” Timokhova added that while approximately 20 percent of crops have been destroyed by the drought, the situation is not yet catastrophic. “Grain collection is currently at the level of domestic consumption,” she said. “Prices of wheat and wheat products are expected to go down as soon as the government intervention program kicks off.” The government on Thursday pledged 10 billion rubles ($335 million) in subsidies and another 25 billion rubles ($837 million) in loans to the agricultural sector.

But despite such glimmers of hope, media reports showed that flour and milk prices have gone up in several regions, prompting the Federal Anti-Monopoly Service (FAS) to wade in to tighten control over the food market to ensure that there is no price gouging because of the drought. Flour prices soared 41 percent to 9500 rubles ($319) from 6720 rubles ($225) a month earlier, the Vedomosti business daily reported Wednesday, citing the top manager of a bakery. Some grain producers are hoarding wheat in expectation of further price increases, the paper wrote, citing the same source. The higher-than-expected demand for grain has led to price hikes for flour in Nizhny Novgorod, Tver, Bashkortostan, Chuvashia, Moscow and Orel regions, according to FAS. The agency also alleged that some companies, including Unimilk, Vamin-Tatarstan and dairy enterprises of Nizhniy Novgorod region have raised prices on their products. Igor Artemyev, the director of the Federal Anti-Monopoly Service, ordered the service’s local offices to intensify their oversight of wholesalers at the latest by next Tuesday.

Analysts have said that increases in domestic prices of grain and related agricultural products are not caused by drought alone. “The current heat wave will continue to affect the prices of grain and flour in Russia,” Andrei Sizov Jr., Managing Director at SovEcon, said, “but the price increases are not only due to natural disasters. They are also rising due to growing prices on the world market.” Sizov said if the futures on the Chicago Board of Trade hold at a level above $6.50 per bushel, prices could spiral up to $7.50. He added that the risk of export restrictions in Russia this season is very high due to the continued drought.Other experts are predicting Russia grain exports will drop by a massive 50 percent, fears that have already translated into international markets. The price of wheat has soared, reaching its highest level in two years earlier this week. Wheat futures for September delivery rose 53 percent on the Chicago Board of Trade, peaking at $6.93 per bushel on Monday, before settling down slightly at $6.90 on Tuesday. Franciscus Welirang, chairman of the Flour Mills Association in Indonesia, Asia’s biggest buyer, said Wednesday that wheat exports from Ukraine and Russia have started to dry up, Bloomberg reported. He said Indonesia has decided to turn to the U.S. and Australia for its wheat imports, which could reach 4.3 million metric tons this year.

With the heat wave showing no signs of abating, grain farmers in the Volga region have been bracing themselves for tough times as the winter planting campaign kicks off in the coming weeks. “The whole Volga region remains dry and substantially moistureless, and this will undoubtedly affect both the quantity and quality of the winter crops,” Sizov said. But despite fears that wheat production shortages could push up food prices around the world, many experts say the supply of wheat remains plentiful after two years of unprecedentedly high global production.

Iran is a major focus of the global media, just as it always has been. It seems to have turned into a never-ending story that becomes more misunderstood day by day. So let’s delve into the story. Is there one more opportunity to employ rational diplomacy to mitigate the threats and alleviate the unbefitting tone used against our country? Or should we sit by idly and see how our fate turns out? A propaganda machine has started its psychological warfare against Iran, inverting the truth to such an extent that even some of our international friends are starting to doubt our intentions.

Diplomacy is one of the basic challenges for Iran. On the one hand, there is the delusion-inflicted rhetoric of some Iranian diplomats that has accomplished nothing—rather, it has resulted in strategic failure. On the other hand, the international community is increasingly moving farther away from applying justice in its dealings with Iran. Since the UN was wielded mischievously by global powers to serve their interests and pressure other countries, global threats have increased. To save face for the United Nations, the Security Council, and other international organizations, the West should stop its behavior duality and its discriminatory enforcement of rules and regulations.

Irresponsible remarks aimed at the territorial integrity of any country are against the spirit of the UN Charter. Worse yet are the multilateral global-powers-orchestrated sanctions, which have proved fruitless and ineffective and merely brought suffering to the nations concerned.

Understanding the sanctions requires a prior knowledge of the current global atmosphere. The new sanctions imposed on Iran are a sequel to the three previous rounds of punitive measures approved by the global powers. But in examining the history of Iran’s relations with foreign countries, we discover that since the era of the Qajar Dynasty (1794-1925), Iran has in fact been under sanctions in one form or another –albeit sometimes unwritten. Iran was the main supplier of Russia’s rice during this era, for example, which was boycotted by the Russians for a period. During the time Iranian Prime Minister Mohammad Mosaddeq co-launched his campaign for the nationalization of Iranian oil, voices were heard calling for the sanctioning of Iran’s oil exports. Many of the new sanction-related developments are rooted in Iran-U.S. ties. The residents of the White House have now set an “emergency” status for relations with Iran, thus seriously toughening the punitive measures against our country.

Three important points about the sanctions should not be missed, though: first is the “composite” nature of the sanctions. Second is the cumulative impact of the sanctions. And the extent of the sanctions is a third basic point. The sanctions have indeed targeted our national economy, technology and industry, particularly in the energy sector. Restrictions on arms deals and threats against our sovereignty (as in the case of inspecting Iranian vessels) are other key parts of the new round of punitive measures.

World powers are seeking a global consensus against Iran through these sanctions. They know that the sanctions per se cannot be effective, but as a tool they can weaken Iran, render its position in the global economy (arising mostly from its energy and transportation privileges) shaky, and undermine Iran’s financial status. They, along with Israel—which is trying to coax an American nod for a military attack—are also trying to mobilize the region against Iran. The illusion of Iran’s pursuit of a nuclear weapon has brought the West around to a belief that Iran is a threat against its regional and international interests.

In the West, the sanctions are thought to have two objectives:

1. Blocking Iran’s nuclear progress: international organizations are utilized in pursuit of this goal. The wave of multilateral and unilateral sanctions by the UN, the United States, the EU, Australia and a number of other countries, hand in hand with media propaganda, are directed towards this goal.2. Pressuring the Iranian nation: both the Arabs and the West are intently focusing on this possibility. International economic restrictions against Iran will lead to the increase in price of imported goods, and Iran’s lagging in the competitive regional market against rivals such as Saudi Arabia and Turkey. Iran’s reduced influence in world energy equations and the increasing exploitation of neighbors (such as Qatar) from joint resources (only bolstered by Iran’s impediment due to sanctions) will ultimately harm Iran’s economy. The West is also cooperating with China and Russia to undermine Iran’s regional role. Take Moscow’s opposition to Iran’s membership in the Shanghai Cooperation Organization, for instance.

The West knows full well that Iran’s cooperation with the IAEA has so far prevented the distortion of realities about Iran’s nuclear program. Nevertheless, the West’s political aim is to forge a confrontation between Iran and the international community. Those sitting in crisis-inciting think tanks in the West would have no problem with Iran even withdrawing from the NPT and preparing the circumstances for a military confrontation. A greater amount of rationality is needed inside Iran today, to quell the rampant existing Iranophobia and to weather the current crisis-like situation.

The results of the bank stress test in Europe have been greeted with widespread skepticism; even though financial markets seem calmer, the system is not yet out of the woods, Robert M Cutler writes for ISN Security Watch.

By Robert M Cutler for ISN Security Watch

Last month, the Committee of European Banking Supervisors carried out what is known as a ‘stress test exercise’ in order to determine how well the principal European banks could hold up in the event of a replay of a major financial crisis. The Council of the European Union had told it to do so in the wake of the chaos following the panic of 2007-08. In the event, 91 banks were tested and seven failed: five in Spain, one in Germany, and one in Greece.

However, leading financial analysts in Europe have scoffed at the results and dismissed them as misleading or worse.

Anthony Harrington, a Contributing Editor to Bloomsbury’s QFinance and twice honored as UK Financial Journalist of the Year, tells ISN Security Watch that even if the stress tests “have not convinced either the press or market commentators,” nevertheless “if their real aim was to calm the markets, they have fulfilled their purpose.”

The manner in which the stress tests were conducted does not account for all the esoteric financial instruments that led to the crisis in 2007-08. Moreover, the absence of a scenario that includes sovereign default (i.e. bankruptcy by a state) could well be considered a significant shortcoming.

Harrington views this criticism, however, as being ill-placed and “pushing stress tests into the realm of catastrophe testing. How impregnable do you want your banks to be?” he asks before continuing: “The point is not to ensure that no bank fails, it is to ensure that there is an orderly procedure for resolving failure.”

And indeed, the creation of a European Financial Stabilization Mechanism (EFSM) with reserves of €750 billion will help those states that cannot help their banks because of their own debt problems.

Not so simple

But it is an open question whether even those reserves will be sufficient if two or three among the countries most at risk - Portugal, Ireland, Italy and Greece (the PIIGs) - require simultaneous recourse to the EFSM. It is possible that even that amount could prove insufficient.

Harrington says that “the major unknowns with respect to each bank’s understanding of its own exposure to toxic assets of the residential mortgage-backed securities variety, has faded as an issue.” This does not mean that not all the toxic assets are gone, but “they are now a known quantity even if it is a quantity that each bank is playing very close to its chest.”

At the same time, European policy has begun to tilt more and more, despite initial French opposition, towards a tightening of fiscal policy and ending of the stimulus programs introduced in order to surmount the 2007-08 crisis.

Thus the day the results of the stress test were made public (it had originally been planned to keep them secret), European Central Bank President Jean-Claude Trichet’s op-ed in the 23 July Financial Times argued for terminating the economic stimulus programs and imposing rigorous of austerity measures across the Continent. This represents the German position put forward at the G-8 and G-20 meetings held in Canada at the end of June and opposed by the US administration.

Austerity and the debt crisis

Intentionally or not, such a policy, which would include raising interest rates while assuring the banks of enough capital to keep them on a steady footing, responds directly to the interests of the financial industry.

Harrington remarks that “the European banking system, even in Europe’s strongest economy [Germany], which also happens to be its biggest exporting nation, is not exactly out the woods. However, I do not expect it to implode if Europe plods along in a sluggish, near zero-growth mode.”

“Borrowing cheap and lending dear generates a huge volume of money for banks, even after you factor in the risks of lending in a sluggish economy,” he adds.

Harrington does not agree with those who criticize the euro as being divorced from the ‘real economy.’ Rather, he says, “The euro is quintessentially a trading currency tightly coupled to the real economy. Its weakness is that it is the result of a monetary union unsupported by any fiscal union.” However, he doubts that EU can “conjure up” a fiscal union after the fact to undergird the euro.

The debt crisis and the euro

Consequently, for Harrington, the strength of the euro ultimately depends upon Europe’s productivity and its export strength, as well as on “market jitters over sovereign debt.”

For the moment, however, concerns over sovereign debt cannot be separated from concerns over the banks. This is why the EU decided to save Greece from sovereign default despite emotional declarations in the press that Athens should suffer the consequences of its behavior.

Even for Greece to suspend payments again would “put huge strains on the euro [and] ... also have a massive impact” on important banks “as fears about the PIIGS generally take wing again,” says Harrington.

Moreover, “if instead of asking about financial instruments, you focus instead purely on two varieties of debt, namely commercial property debt and sovereign debt, the problems in combination have a vaguely Armageddon feel about them.”

The sufficiency of the EFSM thus comes again into focus as a crucial linchpin holding the system together.

Robert M Cutler is a senior research fellow at the Institute of European, Russian and Eurasian Studies at Carleton University in Canada.

Despite President Obama’s promise to President Chavez that his administration wouldn’t interfere in Venezuela’s internal affairs, the US-funded National Endowment for Democracy (NED) is channeling millions into anti-Chavez groups.

Foreign intervention is not only executed through military force. The funding of “civil society” groups and media outlets to promote political agendas and influence the “hearts and minds” of the people is one of the more widely used mechanisms by the US government to achieve its strategic objetives.

In Venezuela, the US has been supporting anti-Chavez groups for over 8 years, including those that executed the coup d’etat against President Chavez in April 2002. Since then, the funding has increased substantially. A May 2010 report evaluating foreign assistance to political groups in Venezuela, commissioned by the National Endowment for Democracy, revealed that more than $40 million USD annually is channeled to anti-Chavez groups, the majority from US agencies.

The National Endowment for Democracy (NED) was created by congressional legislation on November 6, 1982. It’s mandate was anti-communist and anti-socialist and its first mission, ordered by President Ronald Reagan, was to support anti-Sandinista groups in Nicaragua in order to remove that government from power. NED reached its goal after 7 years and more than $1 billion in funding to build an anti-Sandinista political coalition that achieved power.

Today, NED’s annual budget, allocated under the Department of State, exceeds $132 million. NED operates in over 70 countries worldwide. Allen Weinstein, one of NED’s original founders, revealed once to the Washington Post, “What we do today was done clandestinely 25 years ago by the CIA…”

VENEZUELA

Venezuela stands out as the Latin American nation where NED has most invested funding in opposition groups during 2009, with $1,818,473 USD, more than double from the year before.

In a sinister attempt to censure the destination of funds in Venezuela, NED excluded a majority of names of Venezuelan groups receiving funding from its annual report. Nonetheless, other official documents, such as NED’s tax declarations and internal memos obtained under the Freedom of Information Act, have disclosed the names of those receiving its million dollar funding in Venezuela.

Of the more than $2.6 million USD given by NED to Venezuelan groups during 2008-2009, a majority of funds have gone to organizations relatively unknown in Venezuela. With the exception of some more known groups, such as CEDICE, Sumate, Consorcio Justicia and CESAP, the organizations receiving more than $2 million in funding appear to be mere façades and channels to distribute these millions to anti-Chavez groups.

Unknown entities such as the Center for Leadership Formation for Peace and Social Development received $39.954 (2008) and $39.955 (2009) to “strengthen the capacity of community leaders to participate in local democratic processes”.

For several years, the Civil Association Kapé Kapé, which no one knows in Venezuela, has received grants ranging from $45,000 (2008) to $56,875 (2009) to “empower indigenous communities and strengthen their knowledge of human rights, democracy and the international organizations and mechanisms available to protect them”. In a clear example of foreign interference, NED funds were used to “create a document detailing the human rights violations perpetrated against them and denounce them before international organizations”. In other words, the US funded efforts inside Venezuela to aid Venezuelans in denouncing their government before international entities.

FUNDING STUDENT MOVEMENTS

A large part of NED funds in Venezuela have been invested in “forming student movements” and “building democratic leadership amongst youth”, from a US perspective and with US values. This includes programs that “strengthen the leadership capabilities of students and youth and enhance their ability to interact effectively in their communities and promote democratic values”. Two jesuit organizations have been the channels for this funding, Huellas ($49,950 2008 and $50,000 2009) and the Gumilla Center Foundation ($63,000).

Others, such as the ‘Miguel Otero Silva’ Cultural Foundation ($51,500 2008 and $60.900 2009) and the unknown Judicial Proposal Association ($30,300 2008), have used NED funds to “conduct communications campaigns via local newspapers, radio stations, text messaging, and Internet, and distribute posters and flyers”.

In the last three years, an opposition student/youth movement has been created with funding from various US and European agencies. More than 32% of USAID funding, for example, has gone to “training youth and students in the use of innovative media technologies to spread political messages and campaigns”, such as on Twitter and Facebook.

FUNDING MEDIA AND JOURNALISTS

NED has also funded several media organizations in Venezuela, to aid in training journalists and designing political messages against the Venezuelan government. Two of those are the Institute for Press and Society (IPyS) and Espacio Publico (Public Space), which have gotten multimillion dollar funding from NED, USAID, and the Department of State during the past three years to “foster media freedom” in Venezuela.

What these organizations really do is promote anti-Chavez messages on television and in international press, as well as distort and manipulate facts and events in the country in order to negatively portray the Chavez administration.

The Washington Post recently published an article on USAID funding of media and journalists in Afghanistan (Post, Tuesday, August 3, 2010), an echo of what US agencies are doing in Venezuela. Yet such funding is clearly illegal and a violation of journalist ethics. Foreign government funding of “independent” journalists or media outlets is an act of mass deception, propaganda and a violation of sovereignty.

US funding of opposition groups and media inside Venezuela not only violates Venezuelan law, but also is an effort to feed an internal conflict and prop up political parties that long ago lost credibility. This type of subversion has become a business and source of primary income for political actors promoting US agenda abroad.

BAD DIPLOMACY

On Tuesday, statements made by designated US Ambassador to Venezuela, Larry Palmer, on Venezuelan affairs were leaked to the press. Palmer, not yet confirmed by the Senate, showed low signs of diplomacy by claiming democracy in Venezuela was “under threat” and that Venezuela’s armed forces had “low morale”, implying a lack of loyalty to the Chavez administration.

Palmer additionally stated he had “deep concerns” about “freedom of the press” and “freedom of expression” in Venezuela and mentioned the legal cases of several corrupt businessmen and a judge, which Palmer claimed were signs of “political persecution”.

Palmer questioned the credibility of Venezuela’s electoral system, leading up to September’s legislative elections, and said he would “closely monitor threats to human rights and fundamental freedoms”. He also stated the unfounded and unsubstantiated claims made by Colombia of “terrorist training camps” in Venezuela was a “serious” and real fact obligating Venezuela to respond.

Palmer affirmed he would “work closely to support civil society” groups in Venezuela, indicating an intention to continue US funding of the opposition, which the US consistently has referred to as “civil society”.

These statements are a clear example of interference in internal affairs in Venezuela and an obvious showing that Obama has no intention of following through on his promises.

Merida, August 5th, 2010 (Venezuelanalysis.com) – The 39th president’s summit of the Common Market of the South (Mercosur) that took place on Tuesday in Argentina, considered the discussions by the extraordinary meeting of the Union of South American Nations (UNASUR) last week regarding the tense situation between Colombia and Venezuela. Also, after years of discussion, it approved joint customs regulations.

Mercosur is a trade bloc consisting of Brazil, Argentina, Uruguay and Paraguay, with Bolivia, Chile, Colombia, Ecuador, Peru, and Venezuela as associate members.

The Colombian government went to the Organisation of American States (OAS) to accuse Venezuela of supposedly “protecting” guerrillas, whereupon Venezuela requested a meeting of UNASUR to discuss the situation. UNASUR agreed on general notions of peace but failed to reach concrete consensus and called for a presidential Summit of UNASUR members.

On Tuesday, Mercosur formally decided to “take note” of the report issued by the foreign ministers about the UNASUR meeting on 29 July, welcomed the “effort and commitment” put in by UNASUR, and supported the ministers’ resolution to quickly organise an extraordinary meeting of the heads of state of the regional organisation.

Venezuelan Foreign Minister Nicolas Maduro, representing the Venezuelan president who could not attend for health reasons, said after the Mercosur meeting, “We hope that in the next few days the complex situations threatening the peace of our country will be overcome.”

Maduro also called on the Paraguayan congress to approve Venezuela’s full membership to Mercosur. Venezuela became an associated state of Mercosur in 2004 and a full member in 2006, while Brazil, Argentina, and Uruguay have ratified its full membership, it is still waiting for the approval of Paraguay.

Maduro suggested Paraguay “consider the statistics.” He cited the increased commercial relations between Venezuela and Mercosur, which have grown from $2 billion to $28 billion.

A common customs code

The trade block also agreed on a common customs code to speed up and reduce the cost of commerce in South America.

Argentine President Cristina Fernandez said the move showed that Mercosur is a forum for “action not just talk” and they had managed to agree on a formula despite a range of differences.

Mercosur has long wanted to eliminate double-taxation and related transport delays on imports that move through one member country to reach another.

The details have yet to be worked out, but the four member nations agreed to eliminate double-taxation of goods imported from outside Mercosur that are shipped as-is through one country to another, from 1 January 2012.

By 2014, they will eliminate double-taxation of imported goods that receive some added value in one Mercosur nation before reaching another.

Finally, they will create a single Mercosur customs declaration, unifying terms so that taxes on imports as well as exports can be calculated and shared across Mercosur.

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